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Molecular diagnostics, one of the fastest growing segments in the diagnostics market, are key enablers in delivering personalized medicine. According to industry consultants, molecular diagnostics are set to become the dominant platform in clinical medicine. But currently only about 10% of labels for FDA-approved drugs contain pharmacogenomic information. One of the challenges, experts say, is the current regulatory environment; diagnostics are evaluated by the FDA as devices. But this could change shortly. Last year, the FDA made a commitment to developing new scientific standards to establish… Sidebar: Growth Areas in Molecular Diagnostics Experts Cynthia Gawron-Burke, Ph.D. Director, Scientific Liaison External Scientific Affairs, Oncology Licensing, Merck Research Laboratories, which develops medicines, vaccines, and biologic therapies. For more information, visit merck.com/mrl. Hans Johansson. VP, Phadia AB and Head of Phadia Development Business, which develops, manufactures, and markets systems for immune response diagnostics. For more information, visit phadia.com. Walter Koch, Ph.D. VP, Head of Global Research, Roche Molecular Diagnostics, which offers a broad range of diagnostic and blood screening assays. For more information, visit molecular.roche.com. Stephen Little, Ph.D. VP of Personalized Healthcare, Qiagen, which provides companion diagnostics for personalized healthcare. For more information, visit qiagen.com. Michael Nohaile, Ph.D. Head of Molecular Diagnostics, Novartis Molecular Diagnostics, a unit within Novartis Pharmaceuticals that leverages the company’s capabilities to translate identified biomarkers into innovative diagnostic tests to improve patient outcomes. For more information, visit moleculardiagnostics.com. Cecilia Schott, Pharm.D. Business Development Director, Personalized Healthcare and Biomarkers Group, AstraZeneca, which is a global, biopharmaceutical business with a focus on the discovery, development, and commercialization of prescription medicines. For more information, visit astrazeneca-us.com. Companion diagnostic codevelopment has the potential to significantly alter the drug development process. Molecular diagnostics, one of the fastest growing segments in the diagnostics market, are key enablers in delivering personalized medicine. According to industry consultants, molecular diagnostics are set to become the dominant platform in clinical medicine. But currently only about 10% of labels for FDA-approved drugs contain pharmacogenomic information. One of the challenges, experts say, is the current regulatory environment; diagnostics are evaluated by the FDA as devices. But this could change shortly. Last year, the FDA made a commitment to developing new scientific standards to establish what genetic information companies must show to prove their devices and drugs are effective. The agency’s goal is to develop an efficient review process that produces diagnostic-therapeutic approaches through which companies can make specific, FDA-backed claims about benefits. A recent study by Tufts Center for the Study of Drug Development found that while most companies believe companion diagnostics are needed for therapies to be truly personalized, those diagnostics should not necessarily be included on the label because therapies that work for a large share of a population may not benefit from a diagnostic test. Biopharma companies are employing different approaches to develop companion diagnostics. Some have established internal divisions working across therapeutic areas to focus on biomarkers and personalized medicine. Other companies are teaming up with external partners to advance the development of companion diagnostics. There is a paradigm shift in the way the industry develops drugs, says Cecilia Schott, Pharm.D., business development director of the personalized healthcare and biomarkers function at AstraZeneca. “The development of a companion diagnostic in conjunction with a drug represents a shift from the way drugs are traditionally developed,” she says. Hans Johansson, VP of Phadia and head of Phadia development business, says because drug companies are not used to developing diagnostics, there has to be a close relationship between the pharma company and the diagnostic company to go from a test to a clinical outcome. “The process must be a very integrated one,” he says. The Business Model Pharmaceutical and diagnostic companies are working together to develop diagnostic tests for use with drug therapies. And they are approaching this in various ways. For example, this year AstraZeneca launched a new function within the company specifically geared toward personalized healthcare and biomarkers. Within this function, the company is bringing in external experts around the diagnostic space to address the company’s personalized medicine and biomarker strategy. AstraZeneca executives say they are looking to provide targeted therapies across all therapeutic areas. Each of the drug projects that has a personalized healthcare strategy has a multidisciplinary diagnostics subteam that works with external diagnostic partners. “Within AZ, each drug project with a personalized healthcare approach has a diagnostic team,” Dr. Schott says. “Within the diagnostic team, there is multidisciplinary representation, including regulatory, technical and scientific, commercial and clinical development.” Dr. Schott emphasizes that the company’s core business is pharmaceuticals. “We are not in the diagnostics business,” she says. “When we partner with a diagnostic company, we easily gain the benefit of their knowledge and work toward a common goal. We have a very flexible model. We can interact with any diagnostic company and leverage its expertise, technologies, and scientific knowledge. The diagnostic space is very segmented by technology so not every company has the same expertise.” AstraZeneca has a collaboration with Dako to develop companion diagnostic tests for the company’s oncology projects, including biologics and small molecules, in various stages of discovery and development. Under the umbrella of AstraZeneca’s Personalized Healthcare strategy, this collaboration enables the company to develop novel, reimbursable products. Another company pursuing personalized medicine and companion diagnostics is Merck. “We are addressing companion diagnostic needs through a partnering strategy,” says Cynthia Gawron-Burke, Ph.D., director, scientific liaison external scientific affairs for oncology licensing at Merck. “A personalized medicine approach is key to our oncology franchise product development efforts,” she says. “Through our partnering relationships, we can access novel assays that can be used to predict responses to a particular oncology therapeutic, which allows us to deliver the right drug to the right patient.” At Novartis, executives have approached personalized medicine and companion diagnostics through strong internal expertise. In 2008, the company launched Novartis Molecular Diagnostics. “We built this unit from scratch to realize our vision of personalized medicine and companion diagnostics,” says Michael Nohaile, Ph.D., head of molecular diagnostics at Novartis Molecular Diagnostics. “We realized that the pharmaceutical industry is moving toward targeted therapies with an increasing need for high-quality diagnostics. This unit supports that vision. It was founded as a fully integrated unit within Novartis Pharmaceuticals, although we operate independently.” Mr. Nohaile says Novartis doesn’t manufacture tests — the company relies on partners for this capability. Rather, the company’s goal is to develop strong internal experience in the diagnostic realm. “Very few established diagnostic companies have the regulatory experience we have,” he says. “We’re not just interested in the analytical validity, which has traditionally been the focus within the diagnostic industry; we’re also interested in the clinical validity of these tests. We needed the internal capabilities to ensure that we could manage a significant amount of clinical data and validate the analytics at the same time.” To further strengthen its internal capabilities, in March Novartis acquired Genoptix, a specialized laboratory providing personalized diagnostic services to hematologists and oncologists. The acquisition is a strategic fit with Novartis’ skills and expertise, as well the current portfolio of companion diagnostic programs within Novartis Molecular Diagnostics. Novartis also has a collaboration with Cepheid, an in vitro diagnostics technology company, to develop and commerialize an FDA-cleared, standardized, and more sensitive test that monitors the BCR-ABL gene transcript in peripheral blood specimens from patients diagnosed with Philadelphia chromosome-positive chronic myelogenous leukemia (Ph+ CML). Partnering Best Practices Experts agree it’s important for biopharmaceutical companies to engage a diagnostic partner early in the development of a new product. “If a company wants to optimize a treatment with a new drug based on the right companion diagnostic, it needs to create that understanding no later than Phase II trials, which means it has to start development of the test in Phase I trials,” Mr. Johansson says. Stephen Little, Ph.D., VP of personalized healthcare at Qiagen, says sometimes there is a misconception that because the approval of a diagnostic is straightforward, it should be simple to get approval. “Actually, this can be a long and complex process,” he says. “Understanding the guidelines and requirements of both sides is key to a good partnership. For example, the same Phase III trial that is used to demonstrate that a drug works could also be used to demonstrate that the companion diagnostic works.” The challenge, Dr. Little says, is timing. “We don’t want the development of the diagnostic to slow down the development of the drug,” he says. “And we do not want regulatory approval of the diagnostic to slow up regulatory approval of the drug. If the drug requires a diagnostic, it’s important that the two are approved at the same time. “Finally, we don’t want the availability of the diagnostic to limit the availability of the drug,” he continues. “This means we have to have a good sales and distribution network in place for the diagnostic to make sure it is broadly available when the drug is launched.” Walter Koch, Ph.D., VP, head of global research at Roche Molecular Diagnostics, says ideally the time to bring a diagnostic company into a project is well before biomarker analyses are used in clinical trials. “This way, the diagnostic company can have a prototype assay run on the same system with the same software and, ultimately, the same algorithms to interpret the data,” he says. “It saves a tremendous amount of time to have the test in place for the pivotal trials.” Dr. Koch says a partnership at this level requires mutual trust. “The best experiences we’ve had is when the diagnostic team is at the same table with the drug development team,” he says. Dr. Gawron-Burke says full transparency and timely communications are important to make collaborations with diagnostic companies work. “We need to know about the performance of the assay as it develops and how it will be deployed geographically as we commercialize our drug,” she says. “At the earliest stages of the codevelopment program, there should be comprehensive project plans. It’s important to engage senior management in the partnership to make sure there is alignment between the partners. Other factors in a successful partnership include flexibility and contingency planning.” The Market About 350 companies are actively involved in molecular diagnostics today, according to Kalorama. Although growth in the market for molecular assays has been very strong, it hasn’t been quite as robust as anticipated in 2007. Kalorama forecasts growth of about 11% annually through 2015. The primary growth drivers are the continued discovery of genetic markers with proven clinical utility, the increasing adoption of genetic-based diagnostic tests, and the expansion of reimbursement programs. Kalorama experts say the most attractive growth areas are molecular tests for women’s health, infectious diseases, organ transplant testing, and oncology. But companion diagnostics face some barriers, including reimbursement programs that still lag behind the speed of innovation, competition from test services in some segments, complexity, and limited quality control products and programs, according to Kalorama. In fact, there are significant limitations in the current reimbursement system for novel diagnostics, which leads to inconsistent coverage decisions, according to a January report by the Biotechnology Industry Organization. Dr. Koch says unlike therapeutics, which get value-based pricing, diagnostics are typically reimbursed based on procedural codes. “These codes do not capture the value created by the diagnostic information that is provided,” he says. “We have to get better at informing payers about the value of the diagnostics, as well as the increasing efficacy and safety of the therapeutic that we couple these tests with.” The next 10 years will witness significant developments in reagent systems and automation, as well as the introduction of a wide range of new products that will require innovative marketing approaches, according to market research company Venture Planning Group. The molecular diagnostics market is expected to grow about 11% annually through 2015. Source: Kalorama “We have to get better at informing payers about the value of diagnostics. ” Dr. Walter Koch Roche Molecular Diagnostics “To be successful with a personalized treatment based on a companion diagnostic, there has to be a clinically meaningful understanding of the patient subsets. ” Hans Johansson / Phadia “If pharmaceutical company executives think it’s too early to engage with a diagnostic partner, it’s too late. ” Dr. Cecilia Schott / AstraZeneca “There is a misconception that because the approval of a diagnostic is straightforward, it should be simple to get a companion diagnostic approved. ” Dr. Stephen Little / Qiagen Growth Areas in Molecular Diagnostics The most promising major application areas for molecular diagnostic testing over the next five years Note: Results based on a 250-person Web survey of individuals involved in molecular diagnostics research, development, and use. Source: CHI Molecular Diagnostics Survey. Fore more information, visit insightpharmareports.com.